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A graduate job in investment banking or insurance: which should I choose?

What are the differences between graduate jobs in investment banking and insurance and how do you work out which one is best for you?

Don’t go by what people say about insurance and investment banking – conduct your own research.

Investment banking and insurance can both offer job satisfaction and above average graduate salaries if you have the right skills. If you are torn between the two then there are several differences between them that you should consider.

Investment banking v. insurance: working hours

The picture that may come to mind when thinking of investment banking is one of high pay and long hours, and there is a lot of truth in that. The financial markets are open 24 hours a day and it is not unusual for investment banking professionals to spend much of their life at work, even at entry level.

Weekend and late evening shifts often become necessary as schedules become busier. However, talks with senior figures from the industry have revealed that efforts are being made to improve flexibility for employees. If you are happy to put in the time and work longer hours, then you may find that investment banking is a good option for you.

If retaining a healthier work/life balance is particularly important to you then insurance may be the better option. On the whole, new starters will find they are working regular hours. However, as you progress up the career ladder you will find yourself working longer hours – but still typically less than those in investment banking.

Investment banking v. insurance: graduate starting salary

Graduates who begin their career in investment banking tend to have one of the highest graduate salaries (after law and digital), with an average starting salary of £32,900, according to the Institute of Student Employers' (ISE) 2018 student recruitment survey – although that survey reflects salaries within the largest investment banks. Other sources indicate a wider range of salaries within the profession, with some starting around £35,000 to £38,000. But for those who are able to make their way up the promotion ladder, wages and bonuses can push take-home pay into the six-figure bracket.

The ISE survey indicated that graduates beginning in insurance (categorised as banking and financial services) will start on an average salary of £31,244, although – again – there are smaller firms that pay less (around £27,000) especially outside London. Salaries can grow to those of top-level investment bankers but this will depend on what type of insurance you are working in and the career path you choose. This means there is an immediate difference in terms of wages, but people working in both industries have the chance of earning an impressive salary as their career progresses.

Investment banking v. insurance: location

Most of the big banks are based in London, so if you don’t live there you will probably have to relocate. If London life is not for you, then insurance can offer more choice. Many insurance companies have regional bases across the UK – just bear in mind that salaries may be lower than in the capital. However, living costs will generally be cheaper outside London.

Investment banking v. insurance: working life

Graduates are most likely to join an investment bank as an analyst, where they’ll spend their time supporting senior colleagues or a small team. Typical tasks include creating presentations, carrying out analysis and completing administrative work such as setting up meetings. Read our investment banking area of work article to get a better idea of what this job will entail.

In insurance you could start out as a junior broker working on sales pitches or an underwriter with responsibility for deciding rates and premiums on higher-risk policies. Read our insurance and insurance loss adjusting area of work articles to get a better idea of what different roles in insurance entail.

Investment banking v. insurance: reputation

Insurance can be seen as the ‘poor sibling’ of the financial world, with many students seeing it as a boring career. According to a survey carried out by the Chartered Insurance Institute in 2014, only 20% of sixth form and university students would consider a career in insurance and 53% said it was ‘uninspiring’. Contrary to popular belief, the insurance industry is exciting. Toby Wemyss, head of facultative business for Willis Towers Watson, told TARGETjobs Finance: ‘This is an amazing profession and dynamic industry, and there’s so much that’s changing, which keeps things exciting.’

The financial crisis of 2008 hit the reputation of investment banking and the media is often critical of the bonuses traders earn. However, many investment banks have begun undergoing change in response to new regulations that were brought in after the crisis. Most investment banks have compliance departments to make sure they adhere to laws, regulations and their own guidelines.

Don’t go by what people say about insurance and investment banking – conduct your own research. You could speak with peers who have done a placement, attend company open days and on-campus events, and read industry news sources.

Investment banking v. insurance: career progression

Investment banking has a typical promotional ladder for those who hope to climb to the top. Analysts will typically join a bank under a two-year programme and the top performers are often offered the chance to stay for a third year. The most successful graduates can later become an associate and will be given more responsibility. At this level, opportunities for promotion vary from bank to bank but it typically takes around three to four years for an associate to move up to the senior level.

Insurance tends to have a less structured career path and it can take longer to gain the experience needed for promotion. As you progress up the career ladder you will find opportunities to take on more responsibility and prospects include promotion to a managerial role or further specialising in your chosen field.

Investment banking v. insurance: entry requirements

This is one aspect where investment banking and insurance are similar. Many jobs in these sectors are open to all graduates, although some jobs require you to have studied a financial or numerate subject. Major employers in both sectors, on the whole, demand a 2.1 degree but there are some employers who may still consider you if you don’t have that qualification.

Investment banking v. insurance: skills needed

Employers in both sectors are looking for people who can work under pressure and as part of a team, while meeting deadlines. Read our advice on the other skills and competencies you need for a job in investment banking and insurance to find out which one you are suited to.

What a senior finance professional says

Whatever sector you choose, remember it will not necessarily bar you from entering other fields of work later on in your career. Deborah Cooper, a partner at HR consultancy Mercer, moved from actuarial work at the Government Actuary Department to academic lecturing to consultancy work at Mercer. She stresses that a lot of your skills are transferable: ‘Skills such as making sense of data and presenting results in an understandable way to a varied audience are endlessly applicable to many walks of life, leaving your career path flexible.’